From Friends to Foes
The partnership of Samsung Electronics and Google seems to be falling apart.
First, Samsung's Tizen-powered Z1 will compete with Google's Android One in the Indian market.
The two products are low-priced phones in the range of 100,000 won (US$91). Fierce competition between the two models appears to be inevitable in the Indian market, which is receiving a lot of attention as a low-cost smartphone market. With Google's announcement that it will roll out its modular Ara phone in the range of 50,000 won (US$45) within the year, a change in the alliance between the two companies is expected to be unavoidable.
According to industry sources and overseas media outlets on Jan. 19, Google is rapidly increasing its market share with its low-priced Android One. Therefore, Samsung believes that the search engine giant is the biggest stumbling block to increasing its share of the low-end smartphone market.
In fact, Google has reportedly established a plan to accelerate the launch of a new offensive to dominate the entry-level smartphone market, mainly in emerging markets such as Bangladesh, Nepal, Sri Lanka, Indonesia, and the Philippines. Google's move is attributable to the popularity of its low-priced phones in India. The Internet giant can be a major sticking point for Samsung's growth, since the Korean Android phone maker, which started to flounder in the global market in 2014, is planning to increase its market share with low-cost phones.
Samsung is planning to counter Google with its own Tizen operating system. But the problem is that the U.S. firm is actively seeking to check the influence of its rival company by expanding its reach from software to hardware platforms through the Ara phone.
The Internet giant is going to sell components for the Ara phone in the Ara marketplace. If mobile phone parts made by numerous companies are available in the marketplace, it will become a strong platform like Google Play. The increased influence of the Ara phone will inevitably have a negative effect on hardware manufacturers like Samsung.
An industry source said, “Currently, the power of brands is important for smartphones. So, I think that the influence of the Ara phone will be minimal.” The source added, “However, the arrival of the era of self-assembling phones and the increasing influence of the market for mobile phone parts will cause a change in market dynamics. It is due to the fact that hardware manufacturers like Samsung will have to compete with the Ara phone for prices.”
Some in the industry argue that Samsung and Google are just frenemies, and thus the alliance is breakable at any moment. Those views are gaining ground.
The two companies are in strategic cooperative partnerships in line with mutual needs and interests. In the case of patents, the partnerships are aimed at countering Apple. Nevertheless, they are rivals in the hardware area, including low-priced phones.
The Washington Post recently reported, “The alliance of Samsung and Google is a strategic relationship to challenge Apple, which is confined to patents.” The newspaper concluded by saying, “The release of Samsung's own operating system and Google's low-priced phones will ultimately lead to heated rivalry between the two companies, apart from patents.”